Department for Promotion of Industry and Internal Trade ...

1 Department for Promotion of Industry and Internal Trade Ministry of Commerce and Industry Government of India Consolidated FDI Policy (Effective from October 15, 2020) Consolidated FDI Policy 2020 Department for Promotion of Industry and Internal Trade 1 Government of India Ministry of Commerce & Industry Department for Promotion of Industry and Internal Trade (FDI Division) Consolidated FDI Policy Circular of 2020 Subject: Consolidated FDI Policy The Consolidated FDI Policy is attached. 2. This Circular will take effect from October 15, 2020 (Shailendra Singh) Additional Secretary to the Government of India DPIIT File Number 5(2)/2020-FDI Policy Dated the October 15, 2020 Copy forwarded to: 1.

2 Press Information Officer, Press Information Bureau- for giving wide publicity to the above circular. 2. NIC, DPIIT for uploading the Circular on DPIIT's website. 3. Department of Economic Affairs, Ministry of Finance, New Delhi. 4. Reserve Bank of India, Mumbai. 5. Hindi Section for Hindi Translation. Consolidated FDI Policy 2020 Department for Promotion of Industry and Internal Trade 2 CONTENTS Chapter 1: Intent and Objective .. 5 Intent and Objective .. 5 Chapter 2: Chapter 3: General Conditions on Eligible investors .. 14 Eligible investee entities .. 15 Instruments of investments, issue/transfer of shares etc.

3 18 Entry Routes for 18 Caps on 20 Entry Conditions on Investment .. 20 Other Conditions on Investment besides Entry Conditions .. 20 Foreign Investment into/downstream Investment by eligible Indian entities .. 20 Remittance, Reporting and Chapter 4: Procedure for Government Competent Authority .. 24 Cases which do not require Fresh 26 Online Filing of Applications for Government Approval .. 27 Chapter 5: Sector Specific Conditions on FDI ..28 Prohibited Sectors .. 28 Permitted Sectors .. 28 Agriculture ..30 Agriculture & Animal Husbandry .. 30 Plantation 31 Mining and Petroleum & Natural Gas.

4 31 31 Petroleum & Natural Gas .. 33 Manufacturing .. 34 Manufacturing: .. 34 Defence .. 34 Services Sector .. 36 Consolidated FDI Policy 2020 Department for Promotion of Industry and Internal Trade 3 Broadcasting .. 36 Print Media .. 37 Civil Aviation .. 39 Construction Development: Townships, Housing, Built-up Infrastructure .. 42 Parks .. 45 Satellites- establishment and operation .. 45 Private Security Agencies .. 45 Telecom Services .. 46 Trading .. 47 Railway 56 Financial Services .. 57 Asset Reconstruction Companies .. 57 Banking- Private Sector .. 58 Banking- Public Sector.

5 58 Credit Information Companies (CIC) .. 59 Infrastructure Company in the Securities Market .. 59 Insurance .. 61 Pension Sector .. 63 Power Exchanges .. 64 White Label ATM Operations .. 64 Other Financial Services .. 65 Others .. 65 65 Annexure-1 Types of Instruments .. 68 Annexure-2 Provisions Relating to Issue/Transfer of Annexure-3 Specific Conditions in Certain Cases .. 84 Annexure-4 Total Foreign Investment Direct and Indirect Foreign Investment in eligible Indian entities .. 88 Annexure-5 Remittance, Reporting and Annexure-6 Conditions for Broadcasting Sector ..97 Annexure-7 Conditions for Industrial Parks.

6 101 Consolidated FDI Policy 2020 Department for Promotion of Industry and Internal Trade 4 Annexure-8 Permissible limits under portfolio investment schemes through stock exchanges for /FPIs and NRIs .. 103 Annexure 9 Certificate to be furnished by the Prospective Investor as well as the Prospective Recipient Entity .. 106 Consolidated FDI Policy 2020 Department for Promotion of Industry and Internal Trade 5 CHAPTER 1: INTENT AND OBJECTIVE Intent and Objective Foreign Direct Investment (FDI) is considered as a major source of non-debt financial resource for the economic development.

7 FDI flows into India have grown consistently since liberalization and are an important component of foreign capital since FDI infuses long term sustainable capital in the economy and contributes towards technology transfer, development of strategic sectors, greater innovation, competition and employment creation amongst other benefits. Therefore, it is the intent and objective of the Government of India to attract and promote FDI in order to supplement domestic capital, technology and skills for accelerated economic growth and development. FDI, as distinguished from Foreign Portfolio Investment, has the connotation of establishing a lasting interest in an enterprise that is resident in an economy other than that of the investor.

8 The Government has put in place a policy framework on FDI, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated on an annual basis, to capture and keep pace with the regulatory changes, effected in the interregnum. The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry , Government of India makes policy pronouncements on FDI through Consolidated FDI Policy Circular/Press Notes/Press Releases which are notified by the Department of Economic Affairs (DEA), Ministry of Finance, Government of India as amendments to the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 under the Foreign Exchange Management Act, 1999 (42 of 1999) (FEMA).

9 These notifications take effect from the date of issue of Press Notes/ Press Releases, unless specified otherwise therein. In case of any conflict, the relevant Notification under Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 will prevail. The payment of inward remittance and reporting requirements are stipulated under the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 issued by the Reserve Bank of India (RBI). The regulatory framework, over a period of time, thus, consists of FEMA and Rules/Regulations thereunder, Consolidated FDI Policy Circular, Press Notes, Press Releases, Clarifications, etc.

10 The present consolidation subsumes and supersedes all Press Notes/Press Releases/Clarifications/Circulars issued by the DPIIT, which were in force as on October 15, 2020 and reflects the FDI Policy as on October 15, 2020. This Circular accordingly will take effect from October 15, 2020 and will remain in force until Consolidated FDI Policy 2020 Department for Promotion of Industry and Internal Trade 6 superseded in totality or in part thereof. Reference to any statute or legislation made in this Circular shall include modifications, amendments or re-enactments thereof.